COURT FILE NO.: 15-63559
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
CANADIAN MEDICAL ASSOCIATION
Applicant
– and –
ELLISDON CORPORATION
Respondent
Pamela Pengelley, for the Applicant
Iain Peck, for the Respondent
HEARD: June 2, 2015
REASONS FOR Decision
maranger j.
Introduction:
[1] This was an application for an order appointing a mediator/arbitrator in the context of an alleged construction dispute. The respondent resists the application on the basis that the matter is more properly before the courts and is well past the time contemplated by the parties for the utility of an arbitrator to assist in the resolution of this particular dispute.
Factual background:
[2] On November 8, 2000, EllisDon Corporation, as contractor, entered into a standard construction contract with the Canadian Medical Association, as owner. The contract was for the construction of a new office building located at 1870 AltaVista Drive in the city of Ottawa. The contract had a substantial performance target of September 25, 2001.
[3] The construction project was completed on December 13, 2001. A certificate of substantial performance was published on that date.
[4] On January 3, 2013 a fire started in the building causing substantial damage.
[5] The applicant issued a statement of claim on December 24, 2014 alleging that:
“rigid foam insulating boards fell from their original mounting position within the building soffit, coming into contact with the exposed, unprotected ballasts of a lighting fixture located in the canopy overhang, causing the foam insulation to melt and eventually ignite.”
was the cause of the fire.
[6] The statement of claim named 10 different party defendants, claiming $5 million in damages. The defendants include: the architects, several engineers, the structural consultant, the city of Ottawa, and the respondent Ellis Don Corporation. Ellis Don Corporation has cross- claimed against all of the party defendants in their pleadings.
Analysis:
[7] I am persuaded by the arguments advanced by the respondent in this case which include the following:
• The relevant arbitration provisions when read in the context of the contract as a whole, strongly support the proposition that the clauses were meant to apply while the project was still ongoing. The specific clauses dealing with dispute resolution are particularly illustrative of this fact. See GC 8 to GC 8.3 of the construction contract
• The basis of the dispute at hand is the responsibility for a fire occurring some 11 years after the project was completed.
• The applicant has elected to sue multiple parties as potentially responsible for the damages caused by the fire. They have brought this before the courts. To permit two separate methods of proceeding against Ellis Don Corporation in these circumstances would be unfair.
[8] In Penn-Co Construction Canada (2003) v. Constance Lake First Nations [2007] O.J. No. 3940 (SCJ) Pierce J. dealt with a similar situation and held that a Plaintiff who claimed against parties who were not within the ambit of the contractual arbitration clause were precluded from electing to use the arbitration clauses against a single party.
35 The plaintiff says the claims against the non-contractual parties should stand down until the arbitration is finished. It says that a settlement of the arbitration may well result in the remaining claims not proceeding, so the other parties will be advantaged by arbitration.
36 I do not accept this submission. All defendants should be entitled to marshal their defences and push the case along. It is prejudicial to have an action hanging over their heads when they are prevented from defending themselves in a timely way, awaiting the outcome of arbitration between two of the parties. Witnesses may disappear; memories fade; evidence becomes less clear. Counsel who are briefed in the first instance may be unavailable later to take the case. All of this is prejudicial to the non-contractual parties.
39 The result of this scenario is that, if arbitration were ordered, the case may proceed on parallel tracks. The parties were necessary to a successful dispute route resolution by way of arbitration would not be at the arbitral table. There would be duplication of effort, extra cost, and inconvenience as well as the risk of inconsistent results between the court and the arbitrator.
[10] The Court of Appeal upheld Pierce J. in Penn-Co construction Canada (2003) Ltd. V. Constance Lake First Nations (2008) 2008 ONCA 768, O.J. No. 4523 (C.A.) and indicated the following:
6 By bringing this action, the appellant defined the parameters of its dispute with the responders more broadly than it could have under arbitration. The appellant has cast a broad net by commencing the action and, in our view, cannot escape the consequences. Any right the appellant may have to arbitrate certain aspects of this dispute with the respondent must now be considered in light of the claim it has advanced in the action.
7 The dispute as defined by the appellant’s statement of claim involved not only claims that might have been arbitrated under the agreement but also claims and other parties that plainly could not be arbitrated. In these circumstances, it was open to the motions judge to conclude that the desirability of having all aspects of the appellant’s dispute with the respondents and other parties resolved under the umbrella of a single proceeding prevailed over the appellant’s claim to have one part of the dispute arbitrated…
[11] Therefore, for these reasons, the application is dismissed. With respect to the issue of costs if the parties cannot agree I will accept one page of written argument on the issue by each side within 15 days of the release of this decision.
Maranger J.
Released: July 3, 2015
COURT FILE NO.: 15-63559
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
CANADIAN MEDICAL ASSOCIATION
Applicant
– and –
ELLISDON CORPORATION
Respondent
REASONS FOR decision
Maranger J.
Released: July 3, 2015